The days are getting shorter, the air crisper, and playoff baseball is at hand. Which means there’s one question on everyone’s mind:
Is this when new vehicle sales start to slide, and the Service Department comes in from the bullpen for the save?
The answer, apparently, is that it “depends.” Comparing September sales to last year’s hurricane-fueled sales rally doesn’t exactly paint an accurate picture – especially when new car sales estimates remain over 17 million units. Still, there’s little doubt that overall sales are headed toward a year-end fade. As such, we’ve spotted a few trends and stories that might help you prepare for a challenging final quarter – and a successful start to 2019.
September New Vehicle Sales Declined 5.5%. Is it Time to Worry?
What: Automotive News calls it a second-half slowdown, and while that’s true enough there are a few interesting wrinkles in the story. Let’s start with a Harvey hangover from last year’s hurricane replacement business. Indeed, sales bettered the predicted 7% drop in sales and registered a 17.54 million SAAR as well – the fourth highest September on record. Still, the signs are clear: piles of discount dollars aren’t sparking buyer interest like earlier in the year.
Takeaway: It’s time to fire up the Service Closer. Service is the key to retention – something vitally important during slow sales cycles – and offers a sturdy profit center you can count on. It’s also a good source of new vehicle sales… if you’re prepared to leverage it. Are you leveraging customer data and mobile technology to build relationships at the service drive? Using the right tools to create a “right time” and consultative approach improves profitability, increases retention and lowers the cost of new vehicle customer acquisition.
Is the Future of Mobility Robots and Ride-Hailing, or Same as it Ever Was?
What: Earlier this month, National Automobile Dealer Association (NADA) Chairman Wes Lutz took aim at the future of mobility, questioning the logic behind some very common assumptions like the emergence of autonomous cars and the effectiveness of ride-hailing services. According to Lutz, humans are actually quite safe on the road when you consider that we drive 90 million miles per traffic fatality. In regard to services such as Lyft and Uber, he pointed to a recent AAA study that showed using ride-hailing services cost more than twice as much.
Takeaway: Dealership business models are evolving. As such, the Service Department will play an increasingly important role in driving profitability and retention. Whether or not people use ride-hailing apps, buy their own car, opt for a subscription service or just go back to taking the bus, as options increase so too does the opportunity for the entire dealership operation to thrive. Things are definitely changing. And as they do, dealer managers will see increased Service opportunities to build relationships and drive efficiencies.
Speaking of Mobility, What About EVs — and their Impact to Service?
What: A recent study by UPS and GreenBiz offers good insights into fleet perspectives about EVs. That’s yet another one of those “future mobility” topics. Survey results found that environmental benefits and lower cost of ownership were the greatest drivers behind fleet interest: Over 80 percent cited sustainability, and 64% said that the expected lower total cost of ownership was a major factor.
Takeaway: The cost of ownership benefit includes direct and indirect costs over the life of the vehicle. That includes things such as fuel economy, but it’s also an expectation that EVs will require less maintenance than traditional vehicles. Indeed, according to InsideEVs, fewer components means fewer issues and less need for service. For service managers, it’s more complicated: As EVs begin to gain critical mass, dealerships may well have to factor in training and cost of electric service procedures; all of which may make the typical repair order more costly — but less frequent.
Slower Sales Call for Focus – and Creative Solutions
What: A recent series by Automotive News that features dealer success stories during the Great Recession. It chronicles what many dealers did to thrive under terrible sales conditions. For example, Ohio dealer Rhett Ricart improved team morale, while others focused on creating a better customer service and repair experience – an approach that has certainly reaped dividends today.
Takeaway: You don’t have to open a deluxe car wash. however, slow sales offer a good opportunity to focus on retention and customer service. Indeed, consider what many studies have reported over the years: Around 70% of recent car buyers will use a third-party repair shop for service.
Trends like that can change through simple steps, such as introducing the service department to car buyers towards the end of the sale and connecting the sales team to opportunities at the service drive. It’s a fundamental fact that service departments can generate more than 50% of a dealership’s profit; as a result, keeping buyers connected throughout the entire process is a vital step toward thriving during a sales slump.
How Can Dealer-FX Help?
At Dealer-FX, our mission is to help auto brands and dealerships transform the customer experience by providing leading-edge technology solutions that create an exceptional and efficient service experience. How can we help you?
- Creating a Best-Ever Service Experience for Today…and Tomorrow
- Learn more about Service Dashboard
- Service Advisors: Tell the What, Sell the Why